What is candle chart trading?
Before the Americans had invented electricity, the Japanese had created an ancient version of the technical analysis method they used to trade rice. Yes, it is the method used to trade rice.
A Westerner named Steve Nison “discovered” the technical secret of the “Japanese candlestick” and learned this unique trading technique from many Japanese brokers. Since then, Nissen has formed an indissoluble bond with the Japanese candlestick chart. He has studied this unique technical method day and night, and has begun writing related books. Slowly, this mysterious technical analysis method became popular in the 1990s. To make a long story short, without Steve Nissen, the Japanese candlestick may still be an unknown secret.
So, what is the foreign exchange candle line?
The candle line can be divided into different time periods for use, whether it is 1 day, 1 hour, 30 minutes, it is not a problem. The candle chart is used to describe the price fluctuations in a specific time.
✿ The candle line is composed of opening price, closing price, highest price and lowest price within a certain time;
✿ If the closing price is higher than the opening price, we call the candle line a negative line;
✿ If the closing price is lower than the opening price, we call the candle line the Yang line;
✿ The hollow part of the candle line is called “entity”;
✿ The thin part of the candle line and the lower part of the line are called shadow lines;
✿ The top of the upper shadow is the “highest point”;
✿ The bottom of the lower shadow is the “lowest point”.
K-line entity and shadow
Just as humans have different body types, there are different types of candle threads. When we use candlesticks in forex trading, there is nothing more useful than identifying the pattern of candlesticks.
The longer the candle line, the stronger the buying or selling price.
The shorter the candle line, the weaker buying or selling activity. In the street foreign exchange jargon, a bull market means a rising market, and a bear market means a falling market.
The Changyang line shows strong buying of the exchange rate. The longer the Yang line, the higher the closing price of the exchange rate than the opening price. This means that the exchange rate has risen sharply since the opening price, and the buyer is strong. In other words, market bulls outstripped bears and eventually pushed up the exchange rate.
The long Yin line shows that the exchange rate is selling strongly. The longer the Yin line, the lower the closing price of the exchange rate is lower than the opening price. This means that the exchange rate has fallen sharply since the opening price, and the seller is strong. In other words, the market’s short power has overshadowed and eventually pushed down the exchange rate.
The upper shadow line and the lower shadow line provide traders with important trading clues.
The upper shadow shows the period high of the exchange rate, while the lower shadow shows the period low of the exchange rate.
The candle line with a long shadow shows that the trading is active during the time period, and the trading during the time period is far beyond the opening and closing prices.
The candle line with a short shadow shows that most of the trading during the time period is limited to the levels near the opening and closing prices.
If the candlestick line shows a long upper shadow line and a short lower shadow line, this means that the buyer initially pushed the exchange rate higher, but for some reason, the seller enters again and suppresses the exchange rate to fall to the level near the opening price.
If the candlestick shows a long lower shadow and a short upper shadow, this means that the seller initially suppressed the exchange rate lower, but for some reason, the buyer re-entered the market and pushed the exchange rate higher to the level near the opening price.